Coffee Prices Climb to 47-Year High

Coffee prices have surged to their highest levels in almost 50 years, driven by extreme weather in key producing nations and global market dynamics. Futures for Arabica coffee recently reached $3.35 per pound, a 70% increase since the start of the year and the highest price since 1977. Robusta, another major coffee variety, has also seen a significant price jump, climbing over 60% year-to-date.

Brazil and Vietnam, the world’s top coffee producers, have faced devastating weather conditions. Vietnam, the largest Robusta producer, has endured prolonged droughts followed by heavy rains that delayed harvests. Meanwhile, Brazil, the biggest supplier of Arabica beans, struggled with its worst drought in decades before rains belatedly came in October. As a result, yields were lower than expected. Arabica futures for March delivery traded at $3.14 per pound on Thursday, slightly below the record but still near historic highs.

Global demand for coffee continues to rise, particularly in emerging markets like China. However, supply constraints are presenting a major hurdle, with climate change increasingly disrupting tropical regions critical to production. 

What Does This Mean for Me?

Brazil’s 2024/25 output is now forecast at 66.4 million 60-kg bags, slightly above last year’s figures but well below earlier estimates. Shipping disruptions, including Houthi attacks on Red Sea routes, have further fueledmarket volatility.

Major players like Nestlé have already responded to these cost pressures, charging higher prices for products such as Nespresso capsules. As commodity markets adjust, the coffee industry faces an uncertain but increasingly costly future.